Nvidia Exceeds Revenue Predictions in Q4

Nvidia has delivered impressive results for its fourth quarter of fiscal 2025, showcasing a remarkable rise in revenue particularly in its data center segment. However, rising operational costs and narrowing profit margins present some challenges for the company.

The semiconductor company Nvidia (NVDA 3.67%) announced its earnings for the fourth quarter on Wednesday, February 26, which surpassed what analysts had anticipated. Nvidia achieved record revenues of $39.3 billion, exceeding guidance of $38.1 billion and demonstrating a substantial 78% growth compared to the same quarter last year. The adjusted earnings per share (EPS) were reported at $0.89, which was higher than the expected $0.85, indicating solid profitability.

Despite these outstanding results, Nvidia saw a decline in gross margin, dropping to 73.5% from 76.7% the previous year, suggesting increased cost pressures. While the quarter reflects significant growth, the rise in operational costs warrants close scrutiny.

Metric	Q4 FY25	Analysts' Estimate	Q4 FY24	Change (YOY)
Adjusted EPS	$0.89	$0.85	$0.52	71%
Revenue	$39.3 billion	$38.1 billion	$22.1 billion	78%
Gross margin	73.5%		76.7%	(3.2 pps)
Data Center revenue	$35.6 billion		$18.5 billion	93%

Company Profile

Founded in 1993, Nvidia has grown to be a leader in the semiconductor industry, well-known for its graphics processing units (GPUs) that are used in gaming, professional visualization, data centers, and the automotive sector. The company has evolved from a graphics-focused business to a leader in artificial intelligence (AI) and accelerated computing, providing cutting-edge GPUs for AI infrastructure essential for advancements in AI training and inference.

Nvidia’s strategic focus has shifted towards its leadership in AI and accelerated computing, which has significantly driven growth. Its AI technologies are crucial in various sectors, including high-performance computing and cloud services. Nvidia’s success is reinforced by its ability to innovate and provide a comprehensive solution that combines hardware with an extensive software ecosystem. Notable collaborations with major cloud providers like Amazon and Microsoft further solidify its market position.

Quarterly Highlights

Nvidia achieved $39.3 billion in revenue for Q4, with data center sales reaching $35.6 billion, nearly double that of the previous year. This impressive growth highlights Nvidia's strong position in AI and cloud computing, driven by a surge in demand for its Blackwell AI chips. Partnerships with tech giants like Amazon and Microsoft illustrate Nvidia’s expansion in the AI market. One-time collaborations in the automotive sector with companies like Toyota and Hyundai have also diversified revenue streams.

In contrast, the revenue from the gaming and AI PC segment decreased, totaling $2.5 billion in Q4, representing a 22% quarter-over-quarter decline, partly due to supply chain issues as noted by Nvidia's Chief Financial Officer, Colette Kress. However, the automotive division saw a remarkable 103% increase in revenue year-over-year, driven by its strategic partnerships. Despite solid revenues, Nvidia's gross margins dipped to 73.5% from 76.7%, indicating rising costs and signaling the need for operational efficiency improvements.

Nvidia's operating expenses increased to $4.7 billion, a 48% rise compared to the previous year, impacting the company's operating leverage despite the revenue growth. This increase in expenses outpaced revenue growth, suggesting that cost management strategies may be necessary moving forward.

Future Outlook

For the first quarter of fiscal 2026, Nvidia anticipates continued growth with projected revenues of $43 billion, plus or minus 2%. This forecast indicates a potential year-over-year growth of about 65%. The company expects its GAAP and non-GAAP gross margins to be around 70.6% and 71%, respectively, which suggests slight margin contraction. This outlook aligns with the observed performance and indicates possible cost pressures considering Nvidia's evolving product offerings.

Investors should keep an eye on Nvidia’s expanding AI capabilities and their approach to navigating geopolitical and logistical challenges. Company management aims to sustain growth in AI and data center markets, crucial for maintaining Nvidia's competitive advantage. The demand for AI-specific hardware and strong partnerships will be key, yet geopolitical tensions, especially in regions like China, could influence supply chains and revenue generation.

Nvidia, Revenue, AI